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Rumble (NASDAQ:RUM) just landed a game-changing $775 million investment from crypto heavyweight Tether (USDT-USD), and Wall Street is buzzing. Tether is snapping up 103.3 million Rumble shares at $7.50 each, with $250 million earmarked for growth initiatives and the rest funding a stock buyback. The plan? Strengthen Rumble's financial runway and reignite its streaming ambitions. This announcement sent Rumble's stock rocketing nearly 250% since the beginning of the year, and over 110% in the past month, drawing in meme-stock enthusiasts like moths to a flame.
But here's the kicker: Rumble isn't exactly swimming in cash or profits. With a Q3 net loss of $31.5 million and $132 million in cash reserves before this deal, the company was burning through its balance sheet like a wildfire. While the influx of capital buys Rumble another two years at its current burn rate, skeptics are raising eyebrows at its weak engagement and underwhelming scaling metricseven with recent political tailwinds boosting visibility. CEO Chris Pavlovski will keep his controlling stake post-deal, but even his leadership faces a tough challenge in flipping the script.
So, what's next? For now, it's a tug-of-war between meme-stock mania and the harsh reality of fundamentals. The buyback plan minimizes dilution, but with shares trading way above the $7.50 deal price, Rumble might be tempted to issue more stock, risking a major dilution hit. Investors betting on Tether to inject new lifeor meme-stock momentum to keep fueling the fireare in for a wild ride. This is no ordinary growth play; it's a high-stakes gamble that only time will unravel.
This article first appeared on GuruFocus.